3 Rules to calculate Overtime

One of the most common business requirement that I came across at any client was calculation of Overtime… In the US, different states have different overtime rules.

There are 3 main types of Overtime rules

Overtime by working over X number of hours per day

Overtime by working over X number of hours per week

Overtime by working over X number of consecutive days

US States

OT over working 8 HR in a day

OT over working 10 HR in a day

OT over working 12 HR in a day

OT over working 40 HR in a week

OT for working over 5 Consecutive Days

Alaska

x

x

California

x

x

x

x

x

Colorado

x

Nevada

x

x

Puerto Rico

x

x

Virgin Island

x

x

x

Kentucky

x

Other States

x

In this article, we will talk about the simplest rule – Overtime by working over x number of hours per week. In US (most of the states) the standard rule that when an employee works over 40 hours in a work-week, they are entitled to Overtime to be paid at one-and-half (1.5x) times.

In Time Evaluation, we create 3 rules that will help us generate Overtime for such case.

First, we will create a few times types that we will use for calculating Overtime.

In TimeTypeZH01 we will hold the number of hours worked on a daily basis.

In TimeTypeZH02 we will hold the number of hours worked on a weekly basis but not exceeding 40 hrs (weekly threshold).

Rule 1: ZOT1

Rule ZOT1 will process as follows:

If the current day being processed is the first day of the Work Week, then we initialize the Time Type ZH02 to 0 (Zero).

If the current day being processed is not the first day of the Work Week, then read the previous day’s value of Time Type ZH02 (HRS=LZH02) and store the value into current day’s ZH02 value (ADDDBZH02Z)

Rule ZOT2:

In Rule ZOT2, we look at the time pair and see if these time pairs are generated through Clock-Time Events (IT2011) or through Attendance Infotype (IT2002). In either case, we read the number of hours from the Time Pairs and store them into Time Type ZH01 and ZH02.

Here we assume that all the attendance and Time Pairs are to be considered for Overtime Calculations. If you have to use only certain attendances, then the rule will need to account for that.

With this rule, we accumulate total number of hours worked in a week as well as the number of hours worked on a daily basis.

Rule ZOT3:

Rule ZOT3 will check the hours in ZH02 and check against the weekly threshold of 40 hours and determine if Overtime needs to be generated.

In the rule, we read the value of ZH02 on a daily basis and then determine if the value has exceeded 40 hours. If the value of ZH02 is less than 40 hours on the day being evaluated then we have nothing to process. However, if the value of ZH02 exceeds 40 hours, then we generate the Wage Type for all hours over 40 hours and set the ZH02 value to 40 hours.

In the above rule, the step ADDZL 9100 will create the Wage-type 9100 which is Overtime at 1.5x

We bring all these rules in out schema as follows:

Run this scheme for your employees and you will see overtime generated for any employee who records more then 40 hours of Time Events of any attendances.

Special Note:This rule does not account for any special case when we have Holiday and the employee works overtime in that week. Also all Absences, paid or unpaid, are ignored in OT calculation hours. If you have special requirements, then this rule needs to be tweaked to incorporate the business requirement.